Amin Muhammad Ali, a 74-year-old refugee from a destroyed Palestinian village in northern Israel, says he only feels truly at peace when he stands among his ancestors’ graves.

The cemetery, surrounded on all sides by Jewish homes and farms, is a small time capsule, transporting Mr Muhammad Ali — known to everyone as Abu Arab — back to the days when this place was known by an Arabic name, Saffuriya, rather than its current Hebrew name, Tzipori.

Unlike most of the Palestinian refugees forced outside Israel’s borders by the 1948 war that led to the creation of the Jewish state, Abu Arab and his family fled nearby, to a neighbourhood of Nazareth.

Refused the right to return to his childhood home, which was razed along with the rest of Saffuriya, he watched as the fields once owned by his parents were slowly taken over by Jewish immigrants, mostly from eastern Europe. Today only Saffuriya’s cemetery remains untouched.

Despite the loss of their village, the 4,500 refugees from Saffuriya and their descendants have clung to one hope: that the Jewish newcomers could not buy their land, only lease it temporarily from the state.

According to international law, Israel holds the property of more than four million Palestinian refugees in custodianship, until a final peace deal determines whether some or all of them will be allowed back to their 400-plus destroyed Palestinian villages or are compensated for their loss.

But last week, in a violation of international law and the refugees’ property rights that went unnoticed both inside Israel and abroad, Benjamin Netanyahu, the prime minister, forced through a revolutionary land reform.

The new law begins a process of creeping privatisation of much of Israel’s developed land, including refugee property, said Oren Yiftachel, a geographer at Ben Gurion University in Beersheva.

Mr Netanyahu and the bill’s supporters argue that the law will cut out a whole level of state bureaucracy, make land transactions simpler and more efficient and cut house prices.

In practice, it will mean that the 200 Jewish families of Tzipori will be able to buy their homes, including a new cluster of bungalows that is being completed on land next to the cemetery that belonged to Abu Arab’s parents.

The privatisation of Tzipori’s refugee land will remove it from the control of an official known as the Custodian of Absentee Property, who is supposed to safeguard it for the refugees.

“Now the refugees will no longer have a single address — Israel — for our claims,” said Abu Arab. “We will have to make our case individually against many hundreds of thousands of private homeowners.”

He added: “Israel is like a thief who wants to hide his loot. Instead of putting the stolen goods in one box, he moves it to 700 different boxes so it cannot be found.”

Mr Netanyahu was given a rough ride by Israeli legislators over the reform, though concern about the refugees’ rights was not among the reasons for their protests.

Last month, he had to pull the bill at the last minute as its defeat threatened to bring down the government. He forced it through on a second attempt last week but only after he had warned his coalition partners that they would be dismissed if they voted against it.

A broad coalition of opposition had formed to what was seen as a reversal of a central tenet of Zionism: that the territory Israel acquired in 1948 exists for the benefit not of Israelis but of Jews around the world.

In that spirit, Israel’s founders nationalised not only the refugees’ property but also vast swathes of land they confiscated from the remaining Palestinian minority who gained citizenship and now comprise a fifth of the population. By the 1970s, 93 per cent of Israel’s territory was in the hands of the state.

The disquiet provoked by Mr Netanyahu’s privatisation came from a variety of sources: the religious right believes the law contravenes a Biblical injunction not to sell land promised by God; environmentalists are concerned that developers will tear apart the Israeli countryside; and Zionists publicly fear that oil-rich sheikhs from the Gulf will buy up the country.

Arguments from the Palestinian minority’s leaders against the reform, meanwhile, were ignored — until Hizbollah’s leader, Hassan Nasrallah, added his voice at the weekend. In a statement, he warned that the law “validates and perpetuates the crime of land and property theft from the Palestinian refugees of the 1948 Nakba”.

Suhad Bishara, a lawyer from the Adalah legal centre for Israel’s Palestinian minority, said the law had been carefully drafted to ensure that foreigners, including wealthy sheikhs, cannot buy land inside Israel.

“Only Israeli citizens and anyone who can come to Israel under the Law of Return — that is, any Jew — can buy the lands on offer, so no ‘foreigner’ will be eligible.”

Another provision in the law means that even internal refugees like Abu Arab, who has Israeli citizenship, will be prevented from buying back land that rightfully belongs to them, Ms Bishara said.

“As is the case now in terms of leasing land,” she explained, “admissibility to buy land in rural communities like Tzipori will be determined by a selection committee whose job it will be to frustrate applications from Arab citizens.”

Supporters of the law have still had to allay the Jewish opposition’s concerns. Mr Netanyahu has repeatedly claimed that only a tiny proportion of Israeli territory — about four per cent — is up for privatisation.

But, according to Mr Yiftachel, who lobbied against the reform, that means about half of Israel’s developed land will be available for purchase over the next few years. And he suspects privatisation will not stop there.

“Once this red line has been crossed, there is nothing to stop the government passing another law next year approving the privatisation of the rest of the developed areas,” he said.

Ms Bishara said among the first refugee properties that would be put on the market were those in Israel’s cities, such as Jaffa, Acre, Tiberias, Haifa and Lod, followed by homes in many of the destroyed villages like Saffuriya.

She said Adalah was already preparing an appeal to the Supreme Court on behalf of the refugees, and if unsuccessful would then take the matter to international courts.

Adalah has received inquiries from hundreds of Palestinian refugees from around the world asking what they can do to stop Israel selling their properties.